Stinson v. Twin Pines Coal Co., Inc.

CHARLES BYRON STINSON, on behalf of himself and a class of others similarly situated, Plaintiff,v.TWIN PINES COAL CO., INC., and THE AMERICAN COAL COMPANY, Defendants.

MEMORANDUM OPINION AND ORDER

W. KEITH WATKINS, Chief District Judge.

In this diversity, putative-class action, Plaintiff Charles Byron Stinson has sued Twin Pines Coal Company, Inc. ("Twin Pines") for breach of contract. Before the court is Defendant Twin Pines's Motion to Dismiss or, in the Alternative, to Transfer Count I to Arbitration. (Doc. # 32.) As grounds for its motion, Twin Pines contends that Mr. Stinson cannot recover on behalf of himself or a putative class because he is neither a party to that contract nor an intended third-party beneficiary. (Doc. # 33.) Mr. Stinson opposes the motion. (Doc. # 40.)

Based upon careful consideration of the arguments of counsel, the relevant law, and for the reasons set out in the earlier-filed Memorandum Opinion and Order (Doc. # 35) granting a similar motion filed by The American Coal Co., the court finds that Mr. Stinson does not have standing to sue Twin Pines for breach of contract because he lacks a legally protected interest in that contract. Because the court does not have the power to entertain this action, dismissal is required under Federal Rule of Civil Procedure 12(b)(1).[1] In light of the Rule 12(b)(1) dismissal, Twin Pines's Rule 12(b)(6) motion is due to be denied as moot.

I. JURISDICTION AND VENUE

Subject-matter jurisdiction is proper pursuant to 28 U.S.C. § 1441 and the Class Action Fairness Act, codified in part at 28 U.S.C. §§ 1332(d) and 1453. Personal jurisdiction and venue are not contested.

When evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must take the facts alleged in the complaint as true and construe them in the light most favorable to the plaintiff. Resnick v. AvMed, Inc., 693 F.3d 1317, 1321-22 (11th Cir. 2012). To survive Rule 12(b)(6) scrutiny, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "[F]acial plausibility" exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The Rule 12(b)(1) analysis here takes the form of a facial challenge. That challenge properly includes consideration of the contract at issue, which is appended to Twin Pines's motion to dismiss. (Exs. A & B to Doc. # 33 ("Agreement").)

III. BACKGROUND

The facts essential to resolution of the motion to dismiss, construed in Mr. Stinson's favor, are as follows. Beginning in September 2008, Mr. Stinson received high electric bills for properties he owns in Southeast Alabama. Mr. Stinson blames the increased costs on rate hikes he says resulted from the failure of coal suppliers, including Twin Pines, to abide by their contracts for coal deliveries to PowerSouth Energy Cooperative ("PowerSouth") for electric power generation.

PowerSouth is a "non-profit power generation and transmission cooperative" that sells wholesale power to its member retail electric distribution cooperatives. (Am. Compl. ¶ 3.) Hence, "PowerSouth generates power[, ] and its member cooperatives distribute that power." (Am. Compl. ¶ 5.) Covington Electric Cooperative, Inc. ("CEC"), and South Alabama Electric Cooperative ("SAEC"), as member cooperatives, purchase electricity from PowerSouth. (Am. Compl. ¶ 9.) CEC and SAEC are "non-profit member-owned[, ] retail electric distribution cooperatives" that serve rural communities in south Alabama, including the communities (Enterprise and Glenwood) where Mr. Stinson owns three parcels of property. (Am. Compl. ¶¶ 2, 4.) Mr. Stinson purchases power from CEC and SAEC to service these properties and, thus, is a member of both CEC and SAEC.

Mr. Stinson alleges that, at some point between January 2008 and July 30, 2008, Twin Pines breached a coal-supply agreement between it and PowerSouth by failing to supply coal to PowerSouth in accordance with the Agreement's terms. (Am. Compl. ¶¶ 7-8.)

Twin Pines's breach of the Agreement "resulted in PowerSouth paying a higher price to other suppliers of coal in order to keep its power plant in production." (Am. Compl. ¶ 9.) PowerSouth passed those increased costs to its retail electric distribution cooperatives, including CEC and SAEC, which in turn passed the costs to their own members, including Mr. Stinson, in the form of a 30-percent rate increase, beginning in approximately September 2008.

On April 30, 2013, Mr. Stinson filed this action in the Circuit Court of Coffee County, Alabama, against four fictitious Defendants, described as "those persons or entities who or which failed or refused to provide coal in accordance with their contracts with PowerSouth...." (Compl. ¶ 7.) On April 7, 2014, while this action was pending in state court, Mr. Stinson amended his Complaint to substitute AMCOAL and Twin Pines for "Fictitious Defendant A" and "Fictitious Defendant B." In the Amended Complaint, Mr. Stinson asserts claims for breach of contract against AMCOAL and Twin Pines on behalf of himself and "[a]ll individual persons in the State of Alabama who were members of cooperatives that were members of PowerSouth and who paid those cooperatives for power from July 30, 2008 to present." (Am. Compl. ¶ 14.) Mr. Stinson contends that he and the putative class "were the intended and direct third party beneficiaries" of the Agreement and incurred damages as a result of AMCOAL's and Twin Pines's breaches. (Am. Compl. ¶¶ 6, 10.) On May 7, 2014, AMCOAL removed this action to federal court as one arising under the court's original diversity jurisdiction under CAFA and 28 ...

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